HBA-NMO, SEB H.B. 3696 76(R)BILL ANALYSIS Office of House Bill AnalysisH.B. 3696 By: Hawley Energy Resources 8/10/1999 Enrolled BACKGROUND AND PURPOSE Prior to the 76th Legislature, a lessee could transfer a state fee lease at any time. Every transferee was required to succeed to all rights and be subject to all obligations, liabilities, and penalties owed to the state by the original lessee or any prior transferee of the lease. However, bonding programs in place at the Texas Railroad Commission may not have been adequate to ensure that wells on stateowned submerged lands or any other lands were properly plugged and abandoned. H.B. 3696 authorizes a lessee to transfer a lease with the consent of the Commissioner of the General Land Office (commissioner). This bill prohibits the commissioner from withholding the consent unreasonably, and authorizes the commissioner to require the transferee to demonstrate that it has the financial responsibility to discharge its obligations under the lease and to post a bond or provide other security to secure those obligations if the transferee is unable to demonstrate such financial responsibility to the commissioner's satisfaction. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 52.026, Natural Resources Code, by amending Subsection (a) and adding Subsection (e), as follows: (a) Requires the passage of the liability of the transferor to properly discharge its obligations under the lease to the transferee upon prior written consent of the Commissioner of the General Land Office (commissioner). Prohibits the commissioner from withholding the consent unreasonably. Authorizes the commissioner to require the transferee to demonstrate that it has the financial responsibility to discharge its obligations under the lease and to post a bond or provide other security to secure those obligations if the transferee is unable to demonstrate such financial responsibility to the commissioner's satisfaction. (e) Provides that this section (Lease Transfer) does not relieve a person from the duty to comply with a rule adopted or order issued by the Railroad Commission of Texas under another provision of this code. SECTION 2. Effective date: September 1, 1999. SECTION 3. Emergency clause.